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Vietnam Today

Enterprises must adapt to change

Released at: 11:04, 13/04/2015

Enterprises must adapt to change

Businesses warned that they must be more proactive regarding planned free trade agreements.

by Minh Tuyet

Most Vietnamese small and medium enterprises (SMEs) are adjusting passively rather than actively preparing for the ASEAN Economic Community (AEC) as well as free trade agreements, the majority of economic experts at the CEO Network Conference hosted by myLink on April 11 concluded.

Dilemma

"Vietnam is a pioneer of ASEAN in the negotiation of international agreements", said economics expert Mr. Le Dang Doanh. However, only 36 per cent of Vietnamese enterprises have participated in global value chains. Moreover, in Ho Chi Minh City, about 300 enterprises had the ability to join these chains, he said.

In the foreign market, many small Vietnamese companies had to suffer nonsense demands by partners, he believed. He spoke about Vietnamese shrimp exporting companies as an example. It was requested that levels of antibiotics within the shrimp products be so low that a person had to eat at least one kilogram of shrimp for 30 consecutive days to even begin to approach a potential health risk.

From the view of Vietnamese SMEs, representatives of many small companies shared their worries about supply chains, distribution, managing cash flow, and selecting and attracting foreign investors.

At the conference, Ms. Huong, director of a toothbrush supplier for hotels in Vietnam, showed her concern about losing market share if cheaper products from other countries come to Vietnam.

Many asked how their companies should distribute goods. Some SMEs were squirmed with the decision of direct or indirect distribution. Meanwhile, some distributors worried about being neglected by foreign partners after a period of penetration into the Vietnamese market.

Furthermore, SMEs worried how to manage their cash flow, especially small companies who can't afford to hire a CFO. There was also a story about a company that could not find buyers for its stone products, not knowing there was a potential market in the Middle East.

Hence, SMEs needed to improve their leaders' ability, enterprise value and co-operation with strong partners to attract foreign investors, advised the Chairman of Phu Thai Group, Mr Pham Dinh Doan.

Challenges and opportunities

Textiles and agriculture were predicted to develop significantly by economic experts. In textiles, a Trans-Pacific Partnership would raise export turnover from Vietnam to $30 billion and $55 billion by 2020 and 2030 respectively.

In agriculture, after free trade agreements have been finalized, Vietnamese enterprises will have big advantages in rice, fish, shrimp and vegetable export. Even so, Vietnamese enterprises in pork, chicken and beef export would be in a dangerous situation according to experts.

Several Free Trade Agreements (FTA) are being negotiated by Vietnam

-FTA EU – Vietnam might be signed in 2015. In accordance with the agreement, 90 percent of Vietnamese exported goods to EU will have zero tax. Exported goods to EU are expected to rise by 30 to 40 per cent, meanwhile imported goods from the EU will increase over 20 to 25 per cent.

-FTA of Vietnam – Korea has been agreed, expected to be signed in 2015.

-FTA of Vietnam – European Free Trade Associated includes rich small countries which are Norway, Switzerland, Lichtenstein and Iceland.

-FTA of Vietnam and VCUFTA including Russia, Kazakhstan and Belarus has just been finished, expected to be signed and valid in 2015. As a result, Vietnam will export 63, 41 and 8 per cent more goods to Russia, Belarus and Kazakhstan, respectively.

  • TAGS
  • SMEs
  • AEC

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